ITO 16(1)(4), MUMBAI V. HAJRA MEMON, MUMBAI

ITA 3848/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59707 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 14-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: G S PIKALE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition
• Section: 50C; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.3848/MUM/2010 (ASSESSMENT YEAR: 2007-08) INCOME-TAX OFFICER -16(1)(4), R.NO.222, MATRU MANDIR, MUMBAI -400 007 ...... APPELLANT VS MRS. HAJRA I. MEMON, 427, ARUN CHAMBERS, TARDEO ROAD, MUMBAI -400 034 ..... RESPONDENT PAN: ALWPM 6969 M APPELLANT BY: SHRI V. V. SHASTRI RESPONDENT BY: SHRI G. S. PIKALE DATE OF HEARING: 21.10.2011 DATE OF PRONOUNCEMENT: 18.01.1012 O R D E R PER R.S. PADVEKAR, JM : THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE ORDER OF THE LD. CIT (A)-27, MUMBAI DATED 18.02.2010 FOR THE A.Y . 2007-08. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THE LD. CIT (A) ERRED IN DIRECTING THE ADDITION OF RS.68,45,651/- AS LONG TERM CAPITAL GAIN, AND ACCEP TING THE TENANCY RIGHT GOT CONVERTED INTO OWNERSHIP RIGH T AS PER CONSENT DECREE DATED 28.05.1999 AND NOT IN A.Y. 200 7-08 WHEN THE AGREEMENT FOR GIVING OWNERSHIP RIGHT WAS REGISTERED THROUGH A TRANSFER DEED. 2. THE LD. CIT (A) ERRED IN NOT ACCEPTING THE FACT THAT THE ASSESSEE TENANT SURRENDERED / EXCHANGED / TRANSFERR ED THE TENANCY RIGHT ACQUIRED FOR RS.9 LAKHS WITH OWNE RSHIP ITA 3848/M/2010 MRS. HAJRA I. MEMON 2 RIGHT WORTH RS.1,13,49,000/- ON 22.02.2007 AND NOT ON 28.05.1999 WHEN THE CONSENT DECREE WAS PASSED. 3. THE LD. CIT (A) ERRED IN APPLYING SECTION50C WHE REAS THE EXCHANGE/SURRENDER/TRANSFER VALUE IS TAKEN AT RS.1,13,49,000/- BY APPLYING SECTION 2(47) 45, 50C, 55 AND SECTION 112 AND NOT JUST APPLYING SECTION 50C. 4. THE LD. CIT (A) ERRED IN FOLLOWING THE DECISION OF HONBLE ITAT, MUMBAI IN THE CASE OF KISHORI GAITONDE VS. IT O. 2. THE FIRST ISSUE WHICH ARISES FROM GROUND NO.1 & 2 IS WHETHER THE CAPITAL GAIN IS TAXABLE IN THE A.Y. 2007-08 IF IT I S HELD THAT THERE IS TRANSFER WITHIN MEANING OF SEC. 45(1) OF THE I. T. ACT. 3. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING INCOME AT NIL. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF THE AIR INFORMATION AS IT WAS NOTIC ED BY THE A.O. THAT THE ASSESSEE HAS REGISTERED TRANSACTION OF IMMOVABL E PROPERTY WORTH RS.1,13,49,000/- ON 22.02.2007. 4. BRIEF HISTORY OF THE PROPERTY WHICH IS THE SUBJE CT MATTER OF THIS ASSESSMENT PROCEEDING IS AS UNDER. ONE MR. M.K. MO HAMMED WAS IN ADVERSE POSSESSION/TENANT OF THE LAND SITUATED AT D R. ANNIE BESANT ROAD, WORLI, BOMBAY, ADMEASURING 1799.36 SQ.YARDS B EARING CADASTRAL SURVEY NO.3 OF WORLI DIVISION IN THE BUIL DING KNOWN AS SHRINIKETAN. SHRI M.K. MOHAMMED CONSTRUCTED REST AURANT THEREON WHICH WAS FORMERLY KNOWN AS GURUKRIPA. THERE WAS A LITIGATION IN HONBLE HIGH COURT OF BOMBAY BETWEEN CO-OWNERS OF T HE LAND AND SAID SHRI M.K. MOHAMMED. THE HONBLE HIGH COURT APPOINT ED ONE SHRI D.B. KHADE IN HIGH COURT SUIT NO.120 OF 1978 WHO IN STITUTED A SUIT AGAINST SHRI MOHAMMED (HIGH COURT SUIT NO.1318 OF 1 980) SEEKING THE DECLARATION AS TO THE TITLE OF THE SAID LAND AN D FOR THE VACANT POSSESSION OF THE LAND/PROPERTY. THE HONBLE OF HI GH COURT OF BOMBAY PASSED INTERIM ORDER IN THE NATURE OF AN INJ UNCTION AGAINST ITA 3848/M/2010 MRS. HAJRA I. MEMON 3 SHRI M.K. MOHAMMED AND PROHIBITED HIM FROM CARRYING OUT ANY WORK ON THE SAID LAND PENDING HEARING AND FINAL DISPOSAL OF THE SUIT EXCEPT COMPLETION OF RESTAURANT WORK ON THE ROOF. SUBSEQU ENTLY, THERE WAS A SETTLEMENT BETWEEN SHRI M.K. MOHAMMED AND THE COURT RECEIVER APPOINTED BY HONBLE HIGH COURT OF BOMBAY AND CONSE NT TERMS WERE FILED AND ON THE BASIS OF CONSENT TERMS, CONSENT DE CREE WAS PASSED DATED 21.03.1988 AND SHRI M.K. MOHAMMED WAS ORDERED TO PAY TO THE PLAINTIFF SUM OF RS.7,00,000/- IN FULL AND FINAL SE TTLEMENT OF THE CLAIM OF THE PLAINTIFF, SHRI D.B. KHADE; THE COURT RECEIV ER APPOINTED BY THE HIGH COURT OF BOMBAY. IT WAS FURTHER DIRECTED IF S HRI M.K. MOHAMMED MAKES THE PAYMENT AS ORDERED THEN THE PLAI NTIFF, THE COURT RECEIVER WAS TO WITHDRAW THE SAID SUIT FILED AGAINST HIM. AS PER THE CONSENT DECREE PASSED BY THE HONBLE HIGH COURT , THE PROPERTY ADMEASURING 1823.53 SQ.MTRS WAS DECLARED AS AN ABSO LUTE PROPERTY OF SAID SHRI M.K. MOHAMMED AND HE WAS DECLARED AS AN O WNER OF SAID PROPERTY. IT IS PERTINENT TO NOTE HERE THAT THE A SSESSEE HAD ENTERED INTO AN AGREEMENT DATED 6.8.1986 WITH SHRI M.K. MOH AMMED FOR ACQUIRING THE RIGHTS IN THE DISPUTED PROPERTY FOR T HE CONSIDERATION OF RS.9 LAKHS. 5. ONE OF THE CO-OWNERS OF THE PROPERTY, I.E. LALBE N M. PATEL FILED A SUIT BEING CIVIL SUIT NO.1593 OF 1999 AGAINST THE ASSESS EE MAKING THE OTHER CO-OWNERS AS THE DEFENDANTS, CHALLENGING THE VALIDITY OF THE CONSENT DECREE DATED 21.03.1988 PASSED BY HONBLE H IGH COURT IN SUIT NO.1318 OF 1980. SUBSEQUENTLY, THERE WAS SETT LEMENT ARRIVED AT IN THE SUIT FILED BY THE CO-OWNERS AND THE ASSESSEE AND THEY FILED CONSENT TERMS ON 28.05.1999 IN THE HONBLE HIGH COU RT AND BY ITS ORDER DATED 28.05.1999, HONBLE COURT WAS PLEASED T O PASS THE CONSENT DECREE AS PER THE CONSENT TERMS FILED BY TH E CO-OWNERS AND THE ASSESSEE. ASSESSEE PAID RS.7 LAKHS TO THE COUR T RECEIVER OUT OF THE AGREED CONSIDERATION OF RS.9 LAKHS AS PER AGREE MENT DT. 06.08.1986 WITH MR. M. K. MOHAMMAD. THE HONBLE HI GH COURT SET ASIDE THE CONSENT DECREE DATED 21.03.1988 IN SUIT N O.1318 OF 1980 AND THE ASSESSEE UNDERTOOK TO THE HONBLE HIGH COUR T TO REMOVE HERSELF AND ALL FURNITURE, FIXTURES, ARTICLES AND T HINGS FROM THE ITA 3848/M/2010 MRS. HAJRA I. MEMON 4 PROPERTY WHICH WAS SUBJECT MATTER OF THE LITIGATION OF THE SAID LAND ADMEASURING 1823.53. SQ.MTRS. AS PER THE CONSENT TE RMS, UPON REMOVING THE STRUCTURE STANDING THEREON BY THE ASSE SSEE AND MAKING THE COMPLIANCE OF THE TERMS OF THE CONSENT DECREE, THE CO-OWNERS UNDERTOOK TO CREATE A MONTHLY TENANCY IN FAVOUR OF THE ASSESSEE OR HER NOMINEE IN RESPECT OF 14000 SQ.FT. CARPET AREA IN S HRINIKETAN BUILDING (NOW KNOWN AS CEEJAY HOUSE) SITUATED AT DR. ANNIE B ESANT ROAD, WORLI, MUMBAI 400018, ON THE THIRD AND FOURTH FLOOR S THEREON TOGETHER WITH SIX COVERED CAR PARKING SPACES AND ON E OPEN CAR PARKING SPACE, IN THE COMPOUND OF THE SAID BUILDING AT A MO NTHLY RENT OF RS.10,000/- PER MONTH. THE CO-OWNERS FURTHER UNDERT OOK THAT UPON THE SAID PREMISES WOULD BE CONVERTED IN TO OWNERSHI P CONSEQUENT UPON A CO-OPERATIVE SOCIETY OR A CONDOMINIUM BEING FORMED, THEY AGREED TO CONVERT ASSESSEES TENANCY IN THE SAID AR EA OF 14000 SQ.FT AS WELL AS SIX COVERED CAR PARKINGS AND ONE OPEN CAR P ARKING SPACES IN TO THE OWNERSHIP ON THE SAME TERMS AND CONDITIONS AS W ERE APPLICABLE IN CASE OF OTHER EXISTING TENANT OF SHRINIKETAN BUILDI NG. THE ASSESSEE NOMINATED HER TWO SONS NAMELY ASIF IQBAL MEMON AND JUNAID IQBAL MEMON, ALONG WITH HERSELF AS THE TENANTS IN RESPECT OF PROPERTY OF 14000 SQ.FT. CARPET AREA ON THE THIRD AND FOURTH FL OORS OF SHRINIKETAN BUILDING (CEEJAY HOUSE) TOGETHER WITH AGREED PARKIN G SPACES. AS PER THE NOMINATION OF THE ASSESSEE SHE HAD RETAINED 60% AND GAVE 20% EACH FOR HER TWO SONS ASIF AND JUNAID IN THE UNDIVI DED SHARE; RIGHT TITLE AND INTEREST IN THE SAID PREMISES. IT APPEAR S THAT THE CO-OWNERS OF THE SAID PROPERTY ENTERED INTO THE DEVELOPMENT A GREEMENT WITH M/S. MILLENNIUM DEVELOPERS P. LTD. AND IN THE DEVEL OPMENT AGREEMENT THE DEVELOPER ACCEPTED THE LIABILITY OF T HE CO-OWNER TOGETHER AGREED AREA OF 14000 SQ.FT. CARPET AREA IN THE SHRI NIKETAN BUILDING AS WELL AS CAR PARKING SPACES TO BE GIVEN TO THE ASSES SE. IN PURSUANCE OF THE SAID CONSENT DECREE DATED 28.5.1999 IN SUIT NO. 1593 OF 1999, THE CO-OWNERS HAVE OFFERED TO THE ASSESSEE ALTERNATE AC COMMODATION AS PER THE CONSENT DECREE AS WELL AS THE CAR PARKING S PACES INITIALLY ON TENANCY BASIS. IN PURSUANCE OF THE CONSENT DECREE, THE ASSESSEE VACATED THE DISPUTED PREMISES WHICH SHE WAS HOLDING AND SHIFTED TO THE ALTERNATE AGREED PREMISES OF 14000 SQ.FT. CARPE T AREA WHICH WAS ITA 3848/M/2010 MRS. HAJRA I. MEMON 5 ON THIRD AND FOURTH FLOORS OF SHRINIKETAN BUILDING WITH SIX COVERED AND ONE OPEN PARKING SPACES ON AGREED PAYMENT OF RENT O F RS.10000 PER MONTH. IT APPEARS THAT BALANCE PAYMENT OF RS.2 LAK HS OUT OF AGREED RS.9 LAKHS CONSIDERATION TO BE PAID BY THE ASSESSEE TO SHRI M.K. MOHAMED AND THE CO-OWNERS OF THE SAID PROPERTY EXEC UTED AN AGREEMENT DATED 4.11.2004 BUT THE SAID AGREEMENT WA S NOT REGISTERED. THE PART OF THE TERMS OF THE AGREEMENT ARE REPRODUCED IN THE ASSESSMENT ORDER ON PAGE NO.13, 14 & 15. THE S AID AGREEMENT WAS IN RESPECT OF ACCEPTING THE ALTERNATE ACCOMMODA TION IN THE FORM OF 14000 SQ.FT. CARPET AREA IN THE SHRINIKETAN BUIL DING + OTHER AMENITIES INCLUDING PROPORTIONATE AREA OF THE COMMO N TOILETS, SIX COVERED CAR PARKING SPACES AND ONE OPEN CAR PARKING SPACE, ON OWNERSHIP BASIS IN LIEU OF THE TENANT VACATING THE SAID TENANTED PREMISES HELD BY THEM AS A TENANT OF THE CO-OWNERS. FINALLY, THE ANOTHER DEED OF CONFIRMATION AGREEMENT WAS EXECUTED AND REGISTERED ON 22.02.2007 AND FOR THE PURPOSE OF PAYMENT OF STA MP DUTY AND REGISTRATION CHARGES, THE VALUATION OF THE PROPERTY WHICH WAS TRANSFERRED TO ASSESSEE AND HER SONS WAS MADE AT RS .1,13,49,000/-. 6. THE A.O. WAS OF THE OPINION THAT AS THE DEED OF CONFIRMATION WAS REGISTERED ON 22.02.2007, HENCE, THERE WAS A TR ANSFER WITHIN THE MEANING OF SECTION 45(1) R.W. SEC. 2(47) OF THE I.T . ACT AS THE ASSESSEE SURRENDERED HER TENANCY RIGHT AND ACQUIRED THE OWNE RSHIP RIGHT TO THE EXTENT OF RS.1,13,49,000/- (AS PER THE VALUATION MA DE FOR THE STAMP DUTY PURPOSE) AND SAME WAS TAXABLE AS LONG TERM CAP ITAL GAIN (LTCG) IN THE A.Y. 2007-08. THE A.O. GAVE THE BENEFIT OF COST OF ACQUISITION I.E. AMOUNT PAID BY THE ASSESSEE TO SHRI M.K. MOHAM MED OF RS.9,00,000/- IN 06.081986 FOR ACQUIRING HER RIGHTS AND ALSO GAVE THE BENEFIT OF DEDUCTION IN RESPECT OF THE SHARE OF STA MP DUTY AND REGISTRATION CHARGES BORNE BY THE ASSESSEE AND BROU GHT TO TAX RS.68,45,651/- AS LONG TERM CAPITAL GAIN. THE ASSE SSEE SERIOUSLY RESISTED ACTION OF THE A.O. BY TAKING THE STAND THA T HER TENANCY RIGHTS WERE BLOSSOMED INTO THE OWNERSHIP AND THERE WAS N O TRANSFER INVOLVED AND HENCE, WHATEVER THE OWNERSHIP RIGHT TH E ASSESSEE ACQUIRED THAT CANNOT BE SUBJECT MATTER OF CAPITAL G AIN WITHIN THE ITA 3848/M/2010 MRS. HAJRA I. MEMON 6 MEANING OF SECTION 45(1) OF THE ACT. THE ASSESSEE FURTHER PLEADED THAT THE CAPITAL GAIN IF AT ALL CANNOT BE BROUGHT TO TAX IN THE A.Y. 2007-08 AS THE ASSESSEE ACQUIRED THE RIGHTS VIDE CONSENT DE CREE DATED 28.05.1999 AND AT THE MOST THE CAPITAL GAIN COULD H AVE BEEN TAXED IN THAT YEAR. THE CONTENTIONS OF THE ASSESSEE WERE RE JECTED BY THE A.O. AND HENCE, THE ASSESSEE CARRIED THE ISSUE BEFORE TH E LD. CIT (A). THE LD. CIT (A) HELD THAT THE ASSESSEE ACQUIRED THE OWN ERSHIP OF THE PROPERTY AS PER THE CONSENT DECREE OF THE HIGH COUR T DATED 25.05.1999 AND HENCE IT CANNOT BE SAID THAT THE OWN ERSHIP RIGHT HAD BEEN ACQUIRED IN THE A.Y. 2007-08. THE OPERATIVE P ART OF THE DECISION OF THE LD. CIT (A) IS AS UNDER:- LOOKING TO THE FACTS OF THE CASE, IT IS SEEN THAT THE AO HAS HIMSELF STATED IN HIS ORDER THAT THE APPELLANT HAD ACQUIRED THE TENANCY RIGHTS FROM ONE MR. M.K. MOHD ON 6.8.1986 W HO WAS IN ADVERSE POSSESSION OF THE PROPERTY AND HAD CONSTRUC TED 2 RESTAURANTS ON THE SAME. MR. M.K. MOHD. HAD TO PAY RS.7 LAKHS TO THE COURT RECEIVER WHO HAD INSTITUTED A SUIT AGA INST HIM AND THE APPELLANT HAD PAID RS.9 LAKHS ON BEHALF OF MR. M.K. MOHD. AND TO MR. M.K. MOHD AND HE HAD ASSIGNED ALL THE RI GHTS OF THE PROPERTY TO THE APPELLANT. SUBSEQUENTLY ONE OF THE CO-OWNERS OF THE PROPERTY HAD FILED A SUIT AGAINST THE APPELLANT CHALLENGING THE CONSENT DECREE THE APPELLANT HAD OBTAINED FROM MR. M.K. MOHD AND THIS WAS AGAIN COMPROMISED IN THE COURT BY TERM S OF A CONSENT SUIT DT.28.5.1999 IN THE HONBLE BOMBAY HIG H COURT, WHEREAS, AS PER CONSENT DECREE PASSED BY THE HONBL E HIGH COURT, THE APPELLANT HAD AGREED TO VACATE THE WHOLE PLOT OF 18.23 SQ.MTS. OCCUPIED BY THEM AND IN RETURN THE OWNERS U NDERTOOK TO CREATE AREA WITH 6 COVERED AND UNCOVERED CAR PARKIN G SPACES IN SHRI NIKETAN BLDG. AT WORLI, MUMBAI AT A MONTHLY RE NT OF RS.10,000/- PER MONTH AND THE HONBLE HIGH COURT HA D ALSO STATED THAT THE OWNERS HAD AGREED THAT UPON THE PRE MISES BEEN CONVERTED INTO OWNERSHIP CONSEQUENT UPON A CO-OPERA TIVE SOCIETY OR A CONDONIUM BEEN FORMED, THE OWNERS UNDERTOOK TO THE HONBLE HIGH COURT TO CONVERT SUCH TENANCY OF THE APPELLANT INTO ITA 3848/M/2010 MRS. HAJRA I. MEMON 7 OWNERSHIP. AS PER THIS AGREEMENT DT.12.3.1999, THE APPELLANT HAD GIVEN THE OWNERS THE RIGHT TO CARRY OUT NECESSA RY REPAIRS AND RESTORATION OF THE BUILDING TO THE BUILDER, M/S. MI LLENNIUM DEVELOPERS PVT. LTD. WHO HAD TO HANDOVER 14,000 SQ. FT. CARPET AREA WITH 6 COVERED AND UNCOVERED CAR PARKING SPACE S IN THE NEW BUILDING TO THE APPELLANT. BY AN AGREEMENT DT. 4.11.2004, THE APPELLANT WHO WAS TENANT HAD VACATED THE BUILDI NG AND HAD ACCEPTED ALTERNATE ACCOMMODATION. IT IS THE AOS C ONTENTION THAT THIS ALTERNATE ACCOMMODATION IN CEEJAY HOUSE WHOSE STAMP DUTY AND REGISTRATION CHARGES WERE RS.1.13 CRORES SHOULD BE CONSIDERED AS THE SALE VALUE FOR RIGHTS PURCHASED I N 1986 FROM MR. M.K. MOHD AND SHOULD BE ASSESSED IN THIS YEAR A S LONG TERM CAPITAL GAIN, TAKING THE COST OF ACQUISITION AS RS. 9 LAKHS PAID TO MR. M.K. MOHD. IT IS THE APPELLANTS CONTENTION IN THIS A.Y. 2007- 08, NO PROPERTY HAS BEEN ACQUIRED BY THEM AND THE T ENANCY RIGHTS WERE CONVERTED INTO OWNERSHIP RIGHTS AS PER CONSENT DECREE OF THE HONBLE BOMBAY HIGH COURT DT. 28.5.1999 IN T ERMS OF CONSENT SUIT NO.1593 OF 1999, COPY OF WHICH HAS BEE N FILED. THE CONTENTION OF THE APPELLANT IS CORRECT. AS PER THE COPY OF THE CONSENT DECREE, THE APPELLANT HAD ACQUIRED THE OWNE RSHIP OF THE PROPERTY AS PER THE DECREE OF THE HIGH COURT DT.28. 5.1999, WHEREAS THE HONBLE HIGH COURT HAD STATED THAT THE TENANCY RIGHTS WOULD CONVERT INTO OWNERSHIP RIGHTS. HENCE, IT CANNOT BE SAID THAT THESE OWNERSHIP RIGHTS HAD BEEN ACQUIRED IN A.Y. 2007- 08. IN THIS YEAR ONLY THE RIGHT WHICH WAS ACQUIRE IN 1999 BY THE HONBLE HIGH COURTS DECREE HAD BEEN REGISTERED. T HE DATE OF REGISTRATION CANNOT BE TAKEN AS THE DATE OF TRANSFE R BECAUSE THE TRANSACTION HAD TAKEN PLACE MUCH EARLIER, IT WAS JU ST REGISTERED IN THIS YEAR. THE APPELLANT HAD BECOME THE OWNER VIDE THE HIGH COURTS DECREE IN 1999. REGISTRATION WAS THE FINAL CULMINATION OF THE OWNERSHIP RIGHTS ACQUIRED IN 1999. HENCE, IT C ANNOT BE ASSESSED AS CAPITAL GAINS IN A.Y. 2007-08. FURTHER , THE APPELLANT HAS ALSO STATED THAT PROVISIONS OF SEC.50C DO NOT A PPLY IN THIS CASE, FOR THIS, THEY HAVE RELIED UPON THE ORDER OF THE HONBLE ITAT, MUMBAI IN THE CASE OF KISHORI SHARAD GAITONDE VS. I TO (A.Y. ITA 3848/M/2010 MRS. HAJRA I. MEMON 8 2005-06) I.T.A. NO.1561/M/09 WHEREIN THE HONBLE ME MBERS HAVE HELD THAT, IT IS NOTICED FROM PLAIN READING O F SEC.50C, UNLESS THE PROPERTY TRANSFER HAS BEEN COVERED BY THAT SEC. 50C, I.E. A CAPITAL ASSET BEEN LAND OR BUILDING OR BOTH REGISTE RED BY SALE DEED AND FOR THAT PURPOSE THE VALUE HAS BEEN ASSESS ED AND STAMP DUTY HAS BEEN PAID BY THE PARTIES ONLY WHEN S EC.50C CANNOT COME INTO OPERATION. IN THE CASE UNDER CONS IDERATION, THERE IS A TRANSFER OF TENANCY RIGHTS THOUGH THAT I S A CAPITAL ASSET, BUT NOT A CAPITAL ASSET BEEN LAND OR BUILDING OR BO TH. THEREFORE, SEC.50C IS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. ACCORDINGLY, THE AO IS NOT CORRECT IN TAKING THE VALUE ADOPTED OR ASSESSED BY THE AUTHORITY OF A STA TE GOVERNMENT. THE STAMP VALUATION FOR THE PURPOSE OF CALCULATION OF CAPITAL GAINS ON TRANSFER OF TENANCY RIGHTS. A S PER THIS DECISION, THE PROVISIONS OF SEC.50C ARE NOT APPLICA BLE ON TRANSFER OF TENANCY RIGHTS, BUT ONLY ON TRANSFER OF LAND OR BUILDING OR BOTH. HOWEVER, AS DISCUSSED IN THIS CASE, NO TRANSFER HAS TAKEN PLACE IN A.Y. 2007-08. THE APPELLANT HAD ACQUIRED OWNERS HIP RIGHTS IN A.Y. 200-01. HENCE, THE ACTION OF THE AO IN TAXING THE CAPITAL GAINS IN THIS YEAR IS NOT CORRECT AND THE ADDITIONS MADE STANDS DELETED. NOW, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE FACTS PERTAINING TO THE CONTROVER SY ARE ALREADY NARRATED IN DETAIL IN UPPER PART OF THIS ORDER. ONE MR. M.K. MOHAMMED WAS IN ADVERSE POSSESSION OF THE LAND SITU ATED AT GURUKRIPA DR. ANNIE B. ROAD, WORLI, MUMBAI. THE SAID SHRI MOHAMMED WAS RUNNING THE RESTAURANT THERE AS HE HAS CONSTRUCTED THE STRUCTURE ON THE SAID PROPERTY. IT APPEARS THA T THERE WAS A LITIGATION BETWEEN CO-OWNERS IN THE HONBLE HIGH CO URT. THE HONBLE HIGH COURT HAS APPOINTED ONE COURT RECEIVER NAMELY MR. D.B. KHADE. AS PER FACTS ON RECORD SHRI M.K. MOHAMMED AND OTHER OCCUPANTS / TENANTS WERE IN THE SAID PROPERTY. THE COURT RECEI VER FILED THE SUIT AGAINST SHRI M.K. MOHAMMED IN THE HONBLE HIGH COUR T OF BOMBAY ITA 3848/M/2010 MRS. HAJRA I. MEMON 9 SEEKING THE RELIEF BY WAY OF DIRECTIONS TO GET THE VACANT POSSESSION OF THE SAID PROPERTY FROM SHRI M.K. MOHAMMED. THERE W AS COMPROMISE OR SETTLEMENT BETWEEN SHRI M.K. MOHAMMED AND COURT RECEIVER AND IN PURSUANCE OF THE CONSENT TERMS FILED IN THE HON BLE HIGH COURT IN THE SUIT FILED BY THE COURT RECEIVER, THE HONBLE H IGH COURT PASSED A CONSENT DECREE. MEANTIME, THE ASSESSEE ENTERED INT O AN AGREEMENT WITH SHRI M.K. MOHAMMED FOR ACQUIRING THE RIGHTS IN THE PROPERTY WHICH WAS IN HIS POSSESSION FOR THE CONSIDERATION O F RS.9,00,000/- AND THE SAID AGREEMENT WAS EXECUTED IN 06.08.1986. IT APPEARS THAT THE ASSESSEE TOOK OVER THE POSSESSION OF THE DISPUT ED PROPERTY FROM SHRI M.K. MOHAMMED AND HENCE, THE CO-OWNERS OF THE SAID PROPERTY CHALLENGED THE CONSENT DECREE OF THE COURT PASSED I N 1988 AND ALSO MADE THE ASSESSEE AS A PARTY TO THE SUIT PROCEEDING S. AGAIN THERE WAS SETTLEMENT BETWEEN THE CO-OWNERS AND THE ASSESS EE AND IT WAS AGREED THAT THE ASSESSEE WOULD REMOVE HER FROM THE PROPERTY WHICH WAS SUBJECT MATTER OF THE COURT LITIGATION AND ALSO SHE WOULD REMOVE ALL THE FURNITURE, FIXTURE AND OTHER BELONGINGS AND GIVE THE VACANT POSSESSION TO THE CO-OWNERS AND THE CO-OWNERS AGREE D TO GIVE ALTERNATE PREMISES IN THE FORM OF 14000 SQ.FT. CARP ET AREA ON THE THIRD AND FOURTH FLOORS OF SHRINIKETAN BUILDING TOGETHER WITH SIX COVERED CAR PARKING SPACES AND ONE OPEN CAR PARKING SPACE. AS PER THE CONSENT TERMS, IT WAS ALSO AGREED THAT WHEN THE CO-OPERATIV E SOCIETY WOULD BE FORMED THE ASSESSEE WOULD BE GIVEN THE FULL OWNERSH IP RIGHTS OF THE SAID PREMISES AND TILL THAT TIME THE ASSESSEE WOULD BE TREATED AS THE TENANT ON THE MONTHLY RENT OF RS.10,000/-. THE HO NBLE HIGH COURT PASSED THE CONSENT DECREE AS PER THE CONSENT TERMS FILED BY THE CO- OWNERS AND THE ASSESSEE 29.05.1999. IN PURSUANCE O F THE CONSENT DECREE THE ASSESSEE VACATED THE PROPERTY WHICH WAS SUBJECT MATTER OF THE LITIGATION AND TOOK THE POSSESSION OF THE ALTER NATE PREMISES IN SHRINIKETAN BUILDING. THERE WAS AN AGREEMENT ON 4. 11.2004 TO THAT EFFECT. WHEN THE ASSESSEE MADE THE COMPLIANCE OF T HE CONSENT DECREE AND AGREEMENT WAS EXECUTED ON 04.11.2004, IN OUR OP INION, AT THE MOST, THE TRANSFER CAN BE TREATED ON THAT DAY WHEN THE EFFECTIVE AGREEMENT WAS EXECUTED IN PURSUANCE OF THE CONSENT DECREE EVEN IF SAID AGREEMENT WAS NOT REGISTERED BUT SUBSEQUENTLY REGISTERED ON ITA 3848/M/2010 MRS. HAJRA I. MEMON 10 22.02.2007 BY WAY OF CONFIRMATION DEED. SO FAR AS PLEA OF THE ASSESSEE THAT THERE WAS NO TRANSFER AT ALL IS WITHO UT ANY BASE. THE ASSESSEE WAS ACCEPTED AS A TENANT BY THE CO-OWNERS AND AS PER THE WELL SETTLED LAW ON THIS ISSUE THE TENANCY CANNOT B E EQUATED WITH THE OWNERSHIP. THE OWNERSHIP IS THE BUNDLE OF RIGHTS B UT RIGHTS OF THE TENANTS ARE LIMITED. ADMITTEDLY, THE ASSESSEES TE NANCY WAS CONVERTED INTO OWNERSHIP AND THAT CAN BE THE SUBJECT MATTER O F THE CAPITAL GAIN AS IT IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) R.W.S. 45 OF THE I.T. ACT. 8. CORE QUESTION OF CONTROVERSY TO BE DECIDED IS WH ETHER THE SAID TRANSFER WAS IN THE A.Y. 2007-08. ADMITTEDLY, THE ASSESSEE MADE THE COMPLIANCE ON 4.11.2004 AND IN OUR OPINION THIS ISS UE HAS TO GO IN FAVOUR OF THE ASSESSEE AS THE TRANSFER TOOK PLACE O N THE DATE I.E. 4.11.2004 WHEN THE AGREEMENT IN COMPLIANCE WITH THE CONSENT DECREE WAS EXECUTED AND THE ASSESSEE VACATED THE PR OPERTY, WHICH WAS SUBJECT MATTER OF THE LITIGATION BETWEEN HER AN D THE CO-OWNERS. 9. WE ARE UNABLE TO ACCEPT THE PLEA OF THE LD. COUN SEL THAT AT THE MOST, THE TRANSFER COULD BE IN THE YEAR 1999 WHEN T HE CONSENT DECREE WAS PASSED FOR THE REASON THAT THOUGH THE CONSENT D ECREE WAS PASSED IT WAS SUBJECT TO CERTAIN CONDITIONS AND ON COMPLIA NCE OF THE CONCESSIONS ONLY THE ASSESSEE WAS TO BE CONFERRED W ITH THE OWNERSHIP OF THE ALTERNATE PREMISES AGREED TO BE GIVEN IN THE SHRINIKETAN BUILDING BY CO-OWNERS/LANDLORDS OF THE PROPERTY. W E, THEREFORE, HOLD THAT THE TRANSFER TOOK PLACE ON 04.11.2004 AND NOT ON 22.02.2007 EVEN IF THE DEED OF CONFIRMATION WAS REGISTERED ON THAT DATE. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LD. CIT (A) O N ABOVE REASONS THAT CAPITAL GAIN CANNOT BE BROUGHT TO TAX IN THIS YEAR AND ACCORDINGLY WE DECIDE QUESTION NOS.1 & 2 AGAINST THE REVENUE. 10. SO FAR AS GROUND NO.3 IS CONCERNED, IT IS ON TH E APPLICABILITY OF SECTION 50C OF THE ACT. AS WE HAVE HELD THAT THERE IS NO TRANSFER IN THE ASSESSMENT YEAR 2007-08 AS PER OUR DETAILED REA SONING, GROUND NO.3 BECOMES INFRUCTUOUS. WE ACCORDINGLY DISMISS T HE SAME. ITA 3848/M/2010 MRS. HAJRA I. MEMON 11 11. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 8TH JANUARY, 2012. SD/- ( P.M. JAGTAP ) ACCOUTANT MEMBER SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 18TH JANUARY, 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-27, MUMBAI. 4) THE CIT, CITY-17, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN